My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Friday, March 18, 2011

Confessions of a Tax Accountant - Week 3- Last Years Missed Medical and Charitable Donation Receipts

I have received 30 client income tax returns to date, I still have over 190 outstanding. I provide these figures to provide support for my blog Personal Income Tax Filing Delays-Late and Amended T-slips, in which I discuss the havoc that the March 31st filing deadline for T3’s and T5013’s causes for accountants and tax preparers by condensing the income tax filing season into a 3-4 week period. I would suggest this havoc wreaked upon income tax preparers can only be detrimental to the Canada Revenue Agency's ("CRA")  clients, that being you the taxpayer or our clients in this specific situation.

Careful to not hurt myself stepping off my soapbox, this week I encountered two very common income tax filing issues. In reviewing a clients income tax return, I found mixed in together with my clients 2010 donation receipts, a donation slip for 2009. Another client had a summary orthodontic bill (many clients lose their medical receipts and ask for a summary print out from the massage therapist, orthodontist etc) for their son that included a substantial amount of work for 2009 that qualified as a medical expense.I discuss how to deal with these issues below.

Last Years Charitable Donations and Medical Receipts

As charitable donations can be carried forward to any five subsequent years, we typically include a prior year’s donation slip in the current years return. We have never had an issue with the CRA in this regard. If the donation was substantial, we would probably file a T1 adjustment to be safe. However, if you are like most people and have missed a $25 or $100 donation from 2009, I would just include them with your 2010  donations in preparing your return.

Last years medical receipts are more problematic. Medical expenses may be claimed for any twelve month period ending in 2010. Thus, if you missed a large 2009 medical expense, you may want to either file a T1 adjustment for the prior year to include the receipt or if you used a twelve month period that was not the calender year, you may want to file a T1 adjustment to change the twelve month period ending in 2009. Alternatively, you may want to consider including the receipt in a twelve month period ending in 2010.

Unfortunately for medical expenses, calculations are often required for the different permutations and combinations of filing scenarios.

It should be noted that the 12 month period ending in the year may be varied from year to year and these periods can overlap. However, obviously you cannot claim the same medical expense twice if you overlap the periods.

[Bloggers Note: In my Confessions of a Tax Accountant blogs, I will discuss real income tax issues that arise, but embellish or slightly change facts to protect the innocent, as the saying goes.]

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

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